Note 7 - Leases

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Lessee and Lessor, Operating Leases [Text Block]

7.

Leases

Less

ee

The Company leases certain office facilities, storage, and equipment. These leases have varying terms, are generally

one

to

five

years in length, and certain real estate leases have options to extend or early terminate. Several of our operating leases are subject to annual changes in the Consumer Price or similar indexes (CPI). The changes to the lease payment due to CPI changes are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred.

The following table represents the maturity of our operating lease liabilities as of

March 31, 2019:

Remainder of 2019	$	185,574
2020		184,384
2021		16,872
2022		14,364
2023		5,704
Thereafter		-
Total operating lease payments		406,898
Less: imputed interest		(18,447	)
Total operating lease liabilities	$	388,451

Operating lease expense:	Three months ended
	March 31, 2019
Fixed	$	64,702
Variable		5,449
Short-term		9,771
Total	$	79,922
Supplemental cash flow information:
Cash paid towards lease liabilities:
Operating cash flows from operating leases	$	68,561

	March 31, 2019
Operating lease liabilities:
Weighted average remaining lease term (years)		2.0
Weighted average discount rate		5.1	%

Less

or

– Other Revenue

Other revenue consists of revenue derived from our leasing a portion of our headquarters building to Nutracom, LLC (Nutracom) effective

January 1, 2019.

The leased space, encompassing manufacturing, warehouse, and certain office space, is for a term of

seven

years, with a tenant option for an additional

five

-year term. Annual lease amounts range from

$193,000

to

$410,000

over the

seven

-year term.

We recognize lessor rent revenue on a straight-line basis over the term of the lease. As part of this straight-line methodology, the cumulative rental billings

may

be greater or less than the financial period’s recognized revenue; such timing differences are recognized on the balance sheet as an accrued other liability or an unbilled rent revenue receivable.

Also included in other revenue are billings to the tenant for its share of the facility’s common area costs such as real estate taxes, maintenance, and utilities. These same common area costs plus the tenant’s share of the facilities’ depreciation are recorded as cost of goods sold.

The following table details lessor’s estimated remaining straight-line rent revenue over the

seven

-year lease term as compared with fixed rent amounts under the lease agreement.

	Estimated
	Straight-line		Lease Agreement
	Rent Revenue		Fixed Rent
Remainder of 2019	$	259,299	$	187,500
2020		345,732		192,900
2021		345,732		385,800
2022		345,732		385,800
2023		345,732		385,800
Thereafter		691,464		819,825
Total	$	2,333,691	$	2,357,625